SEC Division of Enforcement (the "Division") Co-Director Steven Peikin recommended the Division consider the efficacy of both monetary and non-monetary penalties on a case-by-case basis, noting that non-monetary relief can be just as effective in achieving SEC goals.

In remarks at PLI's White Collar Crimes 2018 event, Mr. Peikin said that while civil penalties "attract headlines" and serve a strong deterrent purpose, these measures are not always warranted if remedial efforts are taken. Non-monetary penalties (such as repayments or the implementation of enhanced accounting controls) also can better serve the SEC's investor protection goal by requiring stronger corporate governance. Mr. Peikin pointed to several recent SEC settlements (e.g., Theranos, Inc. and Tesla), which required defendants to take affirmative steps to come into and remain in compliance, as examples of the significant benefits that may be derived from non-monetary penalties.

Commentary / Kyle DeYoung

Co-Director Peikin's speech is interesting for a couple of reasons. The speech is the most recent example, along with Co-Director Avakian's September 20, 2018 remarks, of SEC enforcement trying to shift the focus away from yearly metrics, such as the total number of enforcement actions and amount of financial remedies, as the primary measure of the SEC's enforcement program to more qualitative measures. While cynics will suggest that these efforts are an attempt to take the sting out of what is expected to be a significant drop in the soon-to-be-announced enforcement statistics for FY 2018, his remarks appear to reflect a substantive change in the way the current leadership evaluates the success of the Division. The speech also further demonstrates the SEC's recent efforts to calibrate remedies in enforcement actions to the facts of individual cases and an increased willingness not to seek the largest financial penalty possible in every case. In particular, the use of non-monetary relief allows the SEC to fashion settlements that further the SEC's priorities while avoiding potential negative consequences to investors that can come with large financial penalties.

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